News

09 November 2017

High Court affirms difficulty in creating a binding pre-nuptial or post-nuptial agreement

The High Court has allowed an appeal which demonstrates the difficulty faced by parties wishing to enter into a binding pre-nuptial or post-nuptial agreement that deals with their respective property in the event that the parties separate in the future.

The parties in this case met online through the use of a dating website.  The husband at the time was approximately 67 years old and was extremely wealthy (he had assets between $18 and $24 million dollars).  The wife was 36 years old, living in the Middle East and had no assets.

Prior to the relationship commencing the husband had told the wife that once he had met her, if he liked her he would marry her, but that she would be required to sign an agreement because his money was for his children.

After the parties had been together for around seven months, the wife flew to Australia to live with the husband and they started planning for their wedding.  Just prior to the wedding, after the wife’s family had already been flown to Australia to attend, the husband asked the wife to sign a pre-nuptial agreement.  Consistent with the requirements of the Family Law Act (“Act”) the wife obtained independent legal advice, which was to the effect that the agreement was the “worst agreement” the lawyer had ever seen.  On the advice of the wife’s lawyer minor amendments were made to the agreement but the lawyer still recommended that the wife did not sign the agreement.  Despite this advice the wife still executed the agreement.

After the wedding the wife also executed a post-nuptial agreement in substantially similar terms to the pre-nuptial agreement, which was required to be executed by a term in the pre-nuptial agreement.  Unfortunately after three years of marriage the parties separated and three years after separation, during the course of the trial, the husband passed away.

The High Court upheld the decision of the primary judge that the agreements were null and void finding that the wife effectively had no choice and was powerless against the husband because:

  • the wife lacked financial equality with the husband;
  • the wife was at a significant disadvantage having left everything behind to move to Australia without a visa to marry the husband, and had no way of returning home;
  • the wife relied on the husband to support her absolutely;
  • the wife was influenced by her emotional connection to the husband and the prospects of motherhood; and
  • the agreements were presented to the wife at a time just before the wedding when her family had already flown over to attend and the husband had made it clear that the wedding would be cancelled if she did not sign.

The above circumstances were held to amount to undue influence and unconscionable conduct by the husband.  The wife will now continue her application for property adjustment and lump sum maintenance in the Federal Circuit Court against the estate of her late husband.

Interestingly no submissions were made regarding the restriction in the Act which prevents parties from excluding a court from making a maintenance order if, when the agreement came into effect, the disadvantaged party was unable to support himself or herself without an income tested pension.

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